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I actually don't believe in corporate income taxes for anyone, but do not understand why oil companies receive tax incentives not enjoyed by other industries. I also do not understand why oil companies are allowed to get away with not paying required royalites on oil taken from public lands. Why should the taxpayer be giving that oil to oil companies for less than market value especially when much of that oil is then sold overseas.

Would oil be the only natural resource from govt lands receiving this kind of "break"? Good point you make on this, Jeff. As I recall, Alaskans get a check each year from oil royalties.

Are there not R&D allowances for other industries in the tax code?

As Mr. Reid drew our attention to ... if our legislators aren't bringing home the bacon to our own states' industries, we should be calling them to task. I'd be more than willing to settle for all of them actually trying to spend govt funds efficiently, effectively and responsibly, not just being power brokers buying votes for perpetuating their own careers. That is absolutely a non-partisan statement!!

G.Clinchy@gmail.com"Know in your heart that all things are possible. We couldn't conceive of a miracle if none ever happened." -Libby Fudim

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Would oil be the only natural resource from govt lands receiving this kind of "break"? Good point you make on this, Jeff. As I recall, Alaskans get a check each year from oil royalties.

Are there not R&D allowances for other industries in the tax code?

As Mr. Reid drew our attention to ... if our legislators aren't bringing home the bacon to our own states' industries, we should be calling them to task. I'd be more than willing to settle for all of them actually trying to spend govt funds efficiently, effectively and responsibly, not just being power brokers buying votes for perpetuating their own careers. That is absolutely a non-partisan statement!!

The principle tax benefits provided for oil companies over and above tax breaks provided to other businesses are the oil depletion allowance and the intangible drilling cost allowances. These allow oil companies to deduct a substantial portion of gross revenues before calculating profits for tax purposes. Interestingly, oil companies have lobbied hard to oppose tax breaks for alternative energy resources, decrying the distortion of "tax subsidies." However, the tax breaks provided to those industries are lower than those provided for oil.

I'm not sure what other kinds of sweetheart deals are provided to those profiting from the use of public lands. In other countries, lease payments to the government for exploitation of publicly owned resources is normal. Here the royalty payments owed have often been reduced, deferred or wived largely as political favors.

How did a thread on oil refining turn into a dissertation on depletion allowances? The only one getting the depletion allowance is they who own the rights to produce. The original reason was a reward for the huge risk indidivuals were taking when the laws were placed on the books.

The depletion allowance is one reason gold mining is so popular among those lions of investment, your friendly MD.

When I was last involved that allowance could go as high as 27% of gross revenues but no higher than 50% of net profits.

My question - if the Depletion allowance is so lucrative, Why don't OIl production stocks pay a higher dividend?

How did a thread on oil refining turn into a dissertation on depletion allowances? The only one getting the depletion allowance is they who own the rights to produce. The original reason was a reward for the huge risk indidivuals were taking when the laws were placed on the books.

The depletion allowance is one reason gold mining is so popular among those lions of investment, your friendly MD.

When I was last involved that allowance could go as high as 27% of gross revenues but no higher than 50% of net profits.

My question - if the Depletion allowance is so lucrative, Why don't OIl production stocks pay a higher dividend?

The depletion allowance was replaced with the intangible drilling cost allowance for the large companies. That is sometimes worth more than the depletion allowance. As I noted in my original post, I actually oppose all corporation income taxes. However, I see no reason why oil companies would receive any tax benefits beyond those provided to other companies. Let them simply pay 35% on their profits along with everyone else.

The depletion allowance was replaced with the intangible drilling cost allowance for the large companies. That is sometimes worth more than the depletion allowance. As I noted in my original post, I actually oppose all corporation income taxes. However, I see no reason why oil companies would receive any tax benefits beyond those provided to other companies. Let them simply pay 35% on their profits along with everyone else.

Large is how big?

REIT's pay no Income Tax - their shareholders do! Maybe that would work for all of us, rather than double taxation.

REIT's pay no Income Tax - their shareholders do! Maybe that would work for all of us, rather than double taxation.

Please explain to me how sentence 3 & sentence 5 in your post match.

I believe that all Corporate income taxes should be replaced by personal income taxes and that all income should be treated identically regardless of source: income from wages, income from investments, income from inheritance, welfare payments, etc., etc. Corporate income tax and the efforts to avoid paying it results in distorted investments and corporate strategies to move profits from one form of income to another that is taxed less. The income tax on corporate taxes distributed as dividends approaches confiscatory levels with personal income tax rates on top of corporate income tax rates resulting in about 60% of profits going to government. That, of course, was the rationale for giving dividends tax preference. However, that simply creates more economic distortion. Solve the problem completely by eliminating corporate taxation. To do this would be a radical shift in the nation's tax policy. Until we are prepared to deal with that then we should at least treat different businesses equitably, meaning a single tax rate on all business profits and no permanent preferences for any industry.

Estimates of the cost of tax preferences for the oil industry range around $2-3 billion/year. The absence of REIT taxation is based on the fact that REITs are generally structured as partnerships. That carries with it potential tax surprises for the unwary.

The absence of REIT taxation is based on the fact that REITs are generally structured as partnerships. That carries with it potential tax surprises for the unwary.

Guess I'm missing something - the REIT's we have tanked with the economic downturn - which made us buy more . Just what tax surprises could we expect? Other than - 0 income = 0 taxable, which raises the deficit